Genesee & Wyoming Inc. to Be Acquired by Brookfield Infrastructure and GIC in $8.4 Billion Transaction - BIP Equity $500M

BIP is paying $500M Equity. I wonder if Equity is $2B overall and debt is $6.5B as then BIP will get 25% ownership. However Singapore Investment Fund GIC is co-investor so they may own 50% and Brookfield Group might own other 50% in which case BIP exposure will be lower.

This is a high priced acquisition so it won’t make sense when we look at 25 times earnings multiple towards end of current economic cycle. I suspect the deal will be leveraged higher and plan must be to invest an additional few $Billions in organic growth projects over next 5-10 years to connect more businesses and customers to the 120 short line rail tracks and to grow earnings. This is the only way this acquisition will make sense.

62.5% of GWW holders will need to approve the deal. US State Dept.(Canadian and Singapore based foreign owners involved) will need to approve as foreign buyers are involved. US Transportation will need to approve as railroads are regulated assets in US. Australia and UK approvals also required. Overall Brookfield have a good reputation and they were able to get the US Nuclear Westinghouse deal done so odds are this will get done by Jan 2020.

https://seekingalpha.com/pr/17559959-genesee-and-wyoming-inc-acquired-brookfield-infrastructure-gic-8_4-billion-transaction